Average Retirement Savings: Are You Normal?

Around half of American households have no retirement accounts at all. No 401(k)s, no IRAs, nothing. You might think that’s because they’re all expecting pension income in retirement. In fact, according to the Government Accountability Office (GAO), around 29% of households age 55 and older have neither retirement savings nor a pension. It doesn’t paint a pretty picture.

What Is Average?

According to the National Institute on Retirement Security, almost 40 million households have no retirement savings at all. The Employee Benefit Research Institute estimates that Americans have a retirement savings deficit at $4.3 trillion. That means all U.S. households (with a head of household between the ages of 25 and 64) have $4.3 trillion fewer in savings than they should have for retirement.

Research by the Federal Reserve found that the median retirement account balance in the U.S. (looking only at those who actually have retirement accounts) was just $59,000 in 2013. The mean balance was $201,300. Those numbers might not sound bad but consider that a retired couple’s medical costs were recently estimated to be about $200,000. And that’s only medical costs.

Unmet Savings Goals

It isn’t just retirement accounts that Americans lack. Looking at overall net worth tells a similar story. According to the Census Bureau, the (median) average net worth excluding home equity for an American 35-44 years old is $14,226. In the 55-64 age range, average net worth is $45,447. The picture of Americans’ net worth looks better if you include home equity, but not every American will be able to tap into that equity to pay for retirement. The financial crisis showed how borrowing against your home equity can go wrong.

For many Americans, Social Security benefits are the only source of income during their retirement. Social Security was never meant to be the sole source of retirement income. Retired workers average a monthly Social Security benefit of $1,354.04 as of October 2016. Add the rising debt levels among older Americans and you have a situation that’s a far cry from most people’s’ retirement dream of travel and leisure.